Employee Downsizing
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Case Details:
Case Code : HROB016
Case Length : 09 Pages
Period : 1990 - 2001
Pub Date : 2001
Teaching Note : Available
Organization : Varied
Industry : Varied
Countries : USA, India, etc...
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
The First Phase
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Till the late-1980s, the number of firms that adopted downsizing was rather
limited, but the situation changed in the early-1990s. Companies such as General
Electric (GE) and General Motors (GM) downsized to increase productivity and
efficiency, optimize resources and survive competition and eliminate duplication
of work after M&As.
Some other organizations that made major job cuts during this period were Boeing
(due to its merger with McDonnell Douglas), Mobil (due to the acquisition of
Exxon), Deutsche Bank (due to its merger with Bankers Trust) and Hoechst AG (due
to its merger with Rhone-Poulenc SA)...
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The Second Phase
By the mid-1990s, factors such as increased investor awareness, stronger
economies, fall in inflation, increasing national incomes, decrease in level
of unemployment, and high profits, reduced the need for downsizing across
the globe. However, just as the downsizing trend seemed to be on a decline,
it picked up momentum again in the late-1990s, this time spreading to
developing countries as well...
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Tackling the Evils of Downsizing
During the early 21st century, many companies began offering
flexible work arrangements to their employees in an attempt to avoid
the negative impact of downsizing. Such an arrangement was reported
to be beneficial for both employees as well as the organization. A
flexible working arrangement resulted in increased morale and
productivity; decreased absenteeism and employee turnover, reduced
stress on employees; increased ability to recruit and retain
superior quality employees improved service to clients in various
time zones; and better use of office equipment and space... |
Lessons from the 'Downsizing Best Practices CompaniesIn the late 1990s, the US government conducted a study on the downsizing
practices of firms (including major companies in the country). The study
provided many interesting insights into the practice and the associated
problems. It was found that the formulation and communication of a proper
planning and downsizing strategy, the support of senior leaders, incentive and
compensation planning and effective monitoring systems were the key factors for
successful downsizing (Refer Exhibit II for highlights of this study)...
Exhibits
Exhibit I: Guidelines to Tide Over the Downsizing Phase
Exhibit II: Highlights of the Downsizing Study
Exhibit III: Assistance Offered to Downsized Employees & Survivors
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